The latest chapter in Harding v Paice

In a decision handed down last week, Ms Finola O’Farrell QC (sitting as a deputy High Court judge) has held that Mr Paice and Ms Springall (the employers) are entitled to have a recent adjudication decision of Mr Christopher Linnett enforced. She did not accept the submissions made by Mr Harding (the contractor) that:

The adjudicator’s decision was reached too late and therefore a nullity.

This was the fifth adjudication between the parties. The third of those adjudications was the first in relation to a disputed termination account the contractor submitted. In that third adjudication, Mr Linnet ordered the employers to pay £397,012 on the basis that they had failed to serve the appropriate pay less notice.

The employers were aggrieved by that decision and started a fourth adjudication to have the proper value of the termination account determined. The contractor sought to restrain those adjudication proceedings by injunction on the grounds that the value of the account had already been determined in the third adjudication. Edwards-Stuart J refused to grant the injunction. The Court of Appeal upheld his decision on the basis that there had been no decision in relation to the actual value of the final account.

In the fourth adjudication, the employers secured a decision from Mr Robert Sliwinski in which he decided the account had been overstated and ordered the contractor to repay £325,484 to the employers. Before Coulson J, the contractor successfully resisted enforcement proceedings on the grounds of apparent bias on the part of the adjudicator. Following that decision, the contractor made a formal complaint to the RICS in respect of Mr Sliwinski’s conduct of the adjudication.

The fifth adjudication

The fifth adjudication was the employers’ most recent attempt to have the termination account properly determined. On 27 April 2016, having carried out an evaluation of the account, the adjudicator (Mr Linnett) ordered the contractor to pay £296,006 to the employers.

The contractor had not agreed to extend time for the adjudicator’s decision, which was consequently given out of time.

The adjudicator was guilty of apparent bias because he had provided a character reference for Mr Sliwinski in connection with the RICS disciplinary hearing, but had not disclosed that fact to the parties.

In support of the first ground, the contractor relied upon the terms of various letters in which he had said that the adjudicator did not have jurisdiction because the employers had attempted to refer the dispute under the wrong procedural rules. While the contractor would agree to an extension of time for the adjudicator to reach a non-binding expert determination, he could not agree to an extension of time for an adjudication decision in circumstances where he did not accept the adjudicator’s jurisdiction. As his solicitor put it:

“…he could not agree to an extension to that which he maintains does not exist.”

The judge dismissed that argument. She accepted the employers’ submission that the reservation in respect of the adjudication was based on the jurisdictional challenge and that once that challenge fell away, so too did the reservation. She therefore concluded that the decision was reached within the period agreed by the parties.

So far as apparent bias was concerned, the judge said that she did not think Mr Linnett had an obligation to disclose the fact that he provided a general character reference for Mr Sliwinski. On an objective basis, Mr Linnett’s view of Mr Sliwinski could not reasonably be considered to impact on the exercise he was required to undertake in the adjudication. She said that although the contractor:

“…might well be over sensitive to issues of perceived impartiality and fairness given the serial adjudications in this matter, the test is an objective one and a fair-minded and informed observer would conclude that there was no real possibility that the tribunal was biased.”

Lessons to learn

There are a number of lessons to be learned from this judgment.

Firstly, an agreement to extend time for an adjudicator’s decision is likely to be taken to be an agreement to just that, whatever reservations continue to be expressed in relation to the adjudicator’s jurisdiction.

Secondly, the test for apparent bias is (as it always has been) an objective test and is whether an informed and fair minded observer, with knowledge of all the relevant circumstances, would conclude that there was a real possibility of bias. The material circumstances will include any explanation given by the decision-maker under review.

Finally, it is worth noting the judge’s comments concerning certain letters written by the contractor’s solicitor designed to elicit responses evidencing bias. Such letters were described as:

“…an unrelenting series of letters that went beyond reasonable questions designed to elicit information regarding his impartiality…”

In the circumstances, the adjudicator could be forgiven for his “intemperate response”.

David and Charles appeared for the successful party, Mr Paice and Ms Springall.